Ministry of Defence 'taking huge risks' in outsourcing buying
Royal United Services Institute report questions plan to set up government-owned, contractor-operated agency
Government plans to outsource to the private sector responsibility for buying £14bn of military equipment a year carries huge risks and flies in the face of practice elsewhere, notably the US, a leading defence thinktank warns .
The plan to set up a government-owned, contractor-operated agency (Goco) is questioned in a hard-hitting report by the Royal United Services Institute, Rusi. The provision of defence has long been recognised as a central task of government, it states.
“The proposal to outsource more than 40% of the MoD budget … is moving in the opposite direction to the US, whose experience of placing more procurement functions with private sector results in higher rather than lower costs,” the Rusi briefing paper notes.
In the US, what constitutes an “inherently governmental function” is openly debated and includes the supply of defence equipment to America’s armed forces.
Yet in the UK “the extensive privatisation of public bodies and outsourcing to the private sector of services funded by government has taken place with little explicit discussion of what responsibilities the government cannot pass across”, says the Rusi report.
The report points to the significance of this summer’s landmark supreme court judgment stating that British soldiers “at war in foreign lands are owed a duty of care and are covered by human rights law should not underestimated”.
The ruling suggested that there were “real limits to the risks and responsibilities that could be passed to a procurement contractor, and to the risks and responsibilities that any contractor would accept”, the report warns.
The MoD said two private consortiums were bidding for the right to run the MoD’s Bristol-based defence equipment and support (DE&S).
One consisted of the US engineering firm CH2M Hill, WS Atkins, and Serco. The other groups were the US engineers Bechtel, PriceWaterhouseCoopers, and PA Consulting. An in-house group, DE&S plus, was also bidding for the Goco contract.
